How to Conduct a Risk Assessment

In this article we discuss:

• Why Risk Assessments Are Key
• How to Conduct a Risk Assessment
• Putting It Into Action

Every business carries risk. And as operations expand with fast-growing teams, new technology tools, and shifting compliance rules, the potential for that risk only grows. Change brings opportunity, but it also opens up new potential points of failure.

A timely example: Companies moving their core systems to the cloud. The move no doubt drives greater agility and sharper visibility into operations and data. But at the same time, it has also introduced avenues for cybersecurity threats and higher potential for system downtime.

As these kinds of risks escalate, a gap is growing in how well leaders—and even dedicated risk managers—can identify and address them. According to Gartner, fewer than one in five enterprise risk management (ERM) leaders are highly confident in their ability to spot and mitigate risks—or to know when it’s time to move from monitoring to direct action.

Knowing how to conduct a risk assessment and when they’re most needed is what separates companies able to thrive under pressure from those that falter.

Why Risk Assessments Are Key

In today’s environment of constant change, rapid innovation, and shifting regulations, risk assessments put the necessary structure in place to keep track of potential business threats. They surface not just where risks exist, but how likely they are to occur, how severe their impact could be, and what strategies will be required to eliminate them.

The fundamental value of a risk assessment is clarity. What can otherwise feel like vague or overwhelming concerns are transparently analyzed. Leaders can see exactly what might go wrong, who could be affected, and how serious the outcomes may be.

For Chief Risk Officers or other heads of ERM, timely risk assessment facilitates effectiveness in the three primary focus areas Gartner highlights as most critical: managing emerging risks, driving ERM ownership, and expanding tech- and data-driven risk insight.

In real-world business environments, risk assessments are most impactful when timed around meaningful change, exposure, or transformation such as:

• Before launching a new process or system: Identify gaps in health and safety or workflow planning before new procedures create downstream problems.

• After an incident or near-miss: Investigate root causes, assess impact, and build a plan to prevent repeat issues.

• During organizational change: Structural changes often expose new risk areas. A fresh look helps reduce friction and confusion.

• When introducing new equipment or tools: Validate usage guidelines and flag any safety, training, or operational concerns early on.

• In response to updated laws or standards: Review practices to ensure full alignment and avoid fines, delays, or operational rework.

• As part of routine reviews: Keep your assessments current and responsive to small shifts before they compound.

When used consistently, risk assessments sharpen operational awareness and give teams a shared language for addressing uncertainty. Managing risk should never be one person’s responsibility. 

How to Conduct a Risk Assessment

Risk assessments are effective when they reflect how decisions are actually made inside the business. They should connect directly to daily operations and be championed by people with real decision-making authority. The following 8-step process will help ensure your risk assessment process is robust in practice.

    1. Define the Scope and Objectives

Start by defining what you're assessing: an internal process, a tool or technology system, a potential new market, a product launch or initiative (or something else). Document what's included in your scope, the teams or assets that are affected, and the outcomes you're trying to avoid.

    2. Identify Potential Hazards and Risks

Examine areas within your defined scope to capture everything that could create risk. By recording your findings, big or small, you ensure that hazards can be properly prioritized. Risks in an enterprise environment can include:

• Physical safety hazards: Unsafe equipment, inadequate facilities, or poor workplace practices that can lead to accidents, injuries, or operational shutdowns.

• Regulatory gaps: Failure to comply with evolving laws and standards—such as data privacy, labor practices, or environmental regulations—that can result in fines, legal actions, or loss of operating licenses.

• Financial exposure: Weaknesses in budgeting, forecasting, or controls that increase vulnerability to cash flow shortfalls, credit risks, or unplanned losses.

• Cybersecurity vulnerabilities: Outdated systems, insufficient monitoring, or human errors that expose sensitive data and critical infrastructure to breaches or attacks

• Vendor dependencies: Heavy reliance on single suppliers or partners without contingency plans, which can magnify disruption if a vendor fails to deliver or goes offline.

• Reputational risk: Negative publicity, ethical missteps, or stakeholder dissatisfaction that can erode brand trust and undermine long-term market position.

Draw on multiple sources including past reports, internal audits, and insights from subject matter experts who understand where vulnerabilities are most likely to surface. Hazard identification must be a thorough and ongoing process to be successful.

    3. Determine Who and What Is at Risk

For each hazard, map out the people, systems, processes, and assets that could be affected. Don’t stop at direct stakeholders—think about downstream effects such as customers, vendors, sensitive data, or operational continuity. 

For example, a ransomware attack might begin by locking employees out of critical systems, which halts day-to-day operations. That downtime delays vendor payments, disrupts customer orders, and triggers regulatory reporting requirements if sensitive data is exposed. What appears like a single IT issue quickly cascades into financial losses, reputational damage, and compliance penalties. 

The more specific you are in identifying initial risks and potential ripple effects at this stage, the easier it becomes to design meaningful controls later.

    4. Evaluate Likelihood and Impact

Once you’ve identified the hazards and those impacted, the next step is to evaluate the risk involved. The traditional approach uses a risk matrix that plots likelihood against impact, but many organizations also apply advanced methods such as scenario analysis or quantitative modeling. 

Modern enterprise risk management platforms connect information from finance, operations, compliance, and IT, so leaders can see interdependencies that a manual matrix might miss. Automated scoring models reduce bias in how risks are classified, while real-time data dashboards let teams track shifting conditions and update priorities as new information comes in. 

    5. Prioritize Risks and Assign Ownership

Use likelihood and impact ratings to establish a clear hierarchy of risks. High-priority risks should transition quickly into detailed action plans, while lower-level risks can be monitored until conditions change. Each priority risk must have a designated owner: someone with the authority to allocate resources and the expertise to address the issue effectively.

    6. Select and Implement Controls

For every high-priority risk, identify the most effective measures to reduce or eliminate exposure. Controls can take many forms—like new processes, data governance implementation, targeted training, revised policies, or formal contingency plans—but they should always be matched to the severity of the threat.

Apply the hierarchy of controls as your guide: Start with strategies that remove or replace the source of risk altogether, then layer on administrative and technical measures as needed. This ensures that responses are proportional, sustainable, and not overly dependent on stopgap fixes.

    7. Communicate and Document

Capture findings in a format that’s both transparent and actionable. This could mean updating the risk register, providing reports to senior leadership, or briefing the teams responsible for implementing controls. Effective communication is also essential—build concise executive summaries for leadership, detailed action briefs for operational teams, and collaborative platforms or dashboards to keep information accessible. 

    8. Monitor, Review, and Adapt

A risk assessment is only effective if it stays current. Set a review cadence that reflects the rhythm of your business (i.e. quarterly, semiannual, or following major organizational changes). Use audits, incident analyses, and performance metrics to refine both your risk profiles and your controls. 

An ongoing cycle of monitoring and adjustment strengthens organizational resilience and embeds risk awareness into everyday decision-making, turning risk management into a continuous discipline rather than a one-off project.

Putting It Into Action

Risk assessments create clarity in environments where uncertainty is inevitable. By structuring how risks are identified and addressed, leaders give their organizations the resilience to operate with confidence, even as conditions change. A risk assessment is best positioned to succeed when it has:

• Clearly defined scope: Boundaries that capture relevant risks without spreading the net too wide

• Shared accountability: Alignment across teams and named owners with the authority to act

• Effective tools: Systems that centralize data, provide transparency, and enable timely responses

• Ongoing monitoring: A rhythm of review and adaptation that keeps assessments relevant as conditions evolve

With these elements in place, leaders can make risk awareness an everyday contributor to how teams plan and act. With the right structure and supporting technology tools, risk assessments become living systems of insight that strengthen decisions and sustain performance.

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